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MarketScreener Homepage  >  Equities  >  Nyse  >  CVS Health Corporation    CVS

CVS HEALTH CORPORATION

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CVS to Test a Device For Dialysis at Home -- WSJ

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07/18/2019 | 02:50am EDT

By Anna Wilde Mathews

CVS Health Corp. is making an ambitious move into kidney care, launching a clinical trial for a new home-dialysis device designed by the firm of Dean Kamen, the Segway inventor.

The company is delving into unusual territory for a drugstore and health insurer. The plan will make it a medical-device firm and a provider of dialysis, the complex blood-cleansing procedure vital to patients suffering from kidney failure. CVS holds exclusive U.S. rights to the HemoCare device, which was created by Mr. Kamen's firm, Deka Research & Development Corp.

CVS will work to capitalize on an initiative announced last week by the Trump administration, which wants to move more dialysis into the home, rather than dialysis centers, where most U.S. patients currently get the procedure. Dialysis is covered by Medicare, including for patients under the age of 65. The care of patients with end-stage renal disease is a major cost for the program, amounting to around $35 billion in 2016, or roughly 7% of total spending under traditional Medicare.

The Department of Health and Human Services said increased use of home dialysis could reduce costs and "preserve or enhance the quality of care."

Alan Lotvin, executive vice president at CVS, said the company is making a broader push into care for patients with kidney disease, including managing the care of those who aren't yet eligible for dialysis. CVS plans to offer home dialysis services, both using the new device and a different method known as peritoneal dialysis, but it doesn't expect to perform dialysis in its own facilities or stores, he said. The new device is expected to be leased or sold to other providers, he said.

"We think that this is a really important step forward for the care of patients," Dr. Lotvin said.

CVS said the clinical trial of the HemoCare device focuses on demonstrating its safety and efficacy and winning approval from the Food and Drug Administration. The trial is expected to enroll approximately 70 patients throughout the country. It will compare the results for the device when it is operated by a nurse with what happens when the dialysis is performed at home by the patient and a partner. CVS said the trial is expected to be completed around the end of 2020, and the company aims to have the device in the market in late 2021.

"We've gone to extraordinary lengths to build safety systems focused on the idea that the device will be used by a patient" in the home, said Mr. Kamen, who is known as the inventor of the Segway electric two-wheeled people mover but has also helped create an array of other devices, several in the health-care category. He said the new home-dialysis device is designed to be simple and intuitive to operate.

CVS declined to comment on financial details of its deal with Deka. Mr. Kamen said that CVS helped fund the development of the device, and Deka will be paid a licensing fee based on "how successful they are in the marketplace." Deka will oversee the device's manufacturing, he said.

Kidney care is part of CVS's effort to become a health-care provider for people with chronic conditions, a touchstone of its nearly $70 billion deal to acquire insurer Aetna Inc.

CVS is under pressure to show financial benefits and paths to growth tied to the deal, and its shares have been languishing in recent months after the company issued earnings projections for the year that fell short of investor expectations.

Dialysis patients often have multiple health problems, making their care far more complex than the types of procedures traditionally offered in retail clinics.

In entering the dialysis business, CVS will be taking on DaVita Inc. and Fresenius Medical Care North America, a subsidiary of a German company, which dominate the U.S. dialysis market. DaVita and Fresenius, which themselves offer home-dialysis options, have longstanding ties to kidney-care doctors who oversee the care of patients, analysts said.

"Nephrologists are everything," said John Ransom, an analyst at Raymond James. "They're the gatekeeper to where you go and what your plan of care is."

Dr. Lotvin said CVS is well-positioned to compete in kidney care, pointing to the new technology of the device and its lack of the fixed cost of a center network, as well as relationships with health-care payers.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CVS GROUP PLC -2.47% 870 Delayed Quote.30.99%
CVS HEALTH CORPORATION 0.65% 62.05 Delayed Quote.-5.30%
DAVITA -1.10% 55.96 Delayed Quote.8.74%
FRESENIUS MEDICAL CARE AG & CO. KGAA 0.40% 60.28 Delayed Quote.6.43%
FRESENIUS SE & CO. KGAA 0.21% 43.99 Delayed Quote.3.80%
GATEKEEPER SYSTEMS INC 15.38% 0.15 Delayed Quote.36.84%
RAYMOND JAMES FINANCIAL 1.16% 78.56 Delayed Quote.5.58%
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Financials (USD)
Sales 2019 253 B
EBIT 2019 15 026 M
Net income 2019 6 593 M
Debt 2019 62 460 M
Yield 2019 3,21%
P/E ratio 2019 12,2x
P/E ratio 2020 10,8x
EV / Sales2019 0,57x
EV / Sales2020 0,53x
Capitalization 80 696 M
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Larry J. Merlo President, CEO & Non-Independent Director
David Wyatt Dorman Chairman
Jonathan C. Roberts Chief Operating Officer & Executive Vice President
Eva C. Boratto Chief Financial Officer & Executive Vice President
Troyen A. Brennan Chief Medical Officer & Executive Vice President